Interest Rate Predictions | Week of June 28, 2010

It seems a little unlikely, but rates are rallying–still.

Last week was a little crazy.  FHA and conventional rates improved as the mortgage bonds had a whopper of a week, up 62 basis points.  This was mostly related to continued negative economic outlooks and the Fed’s concern that the Euro mess could make its way to the U.S.

This continued the rally that dates back to early-April.

This Week’s Interest Rate Predictions

Monday opened aggressively again.  Another 50 basis point gain.  As a reminder, in the good ol’ days we used to call any double-digit day “volatile.”  Now it’s the norm.

There’s a lot of data coming out this week.  Yesterday held the Personal Consumptions Expenditures, the Fed’s preferred inflation gauge.   In the absence of economic growth, inflation isn’t being challenged and that is positive for mortgage bonds and rates.

This week could be crazy as we see Case-Shiller today, Pending Home Sales on Thursday, and Friday’s big number–the Unemployment Rate.  That’s always a volatile day, but it also occurs on the Friday before a holiday weekend.  Holiday weekends are also volatile.  Think fireworks-type of volatility.

If you’ve been shopping for a purchase or refinance loan, you’ve been rewarded with historically low rates.    There is little news that could push rates lower, but it could take only a spark to ignite a .5% increase.  I’d evaluate locking in prior to Friday if it was my loan.